Sustainable Development Policy Institute wants to bring Iran-Pakistan Pipeline in the spotlight

Islamabad, October 23, 2013 (PPI-OT): Sustainable Development Policy Institute (SDPI) launched its latest research report here on Wednesday, seeking to bring the Iran-Pakistan Pipeline in the spotlight, and aims to create a dialogue for re-evaluating Pakistan’s Energy Equation. The report is an independent project of SDPI’s energy team, in light of existing data.

SDPI report analyzes Pakistan’s natural gas sector, performance of gas-fired thermal power plants and the Iran-Pakistan pipeline project, and gives specific recommendations based on the report’s salient findings. One of its key research elements is a calculation of the real cost of electricity generation after injection of Iranian Gas, at the rate of the prevailing Gas Sale Purchase Agreement (GSPA).

Presenting the report, Engr. Arshad H. Abbasi, Energy Advisor, SDPI, said that as gas and oil prices have become an outdated phenomenon all over the world with the expansion of shale gas; Pakistan needs to re-negotiate the gas price it intends to buy from Iran.

He gave the example of Italy and Germany that took their cases to the International Court of Arbitration for delinking of the oil and gas pricing regarding their gas deals. He said that there is no point for cancellation of the Iran-Pakistan gas pipeline agreement but renegotiation of the gas prices under the prevalent situation under the clause 6.3.2 provided in the agreement.

To substantiate his argument Arshad Abbasi said according to the agreement rate for Pakistan is more than $15/ MMBTU if calculated in relation to the current JCC prices though Iran is supplying gas to Turkmenistan at a rate of $4/ MMBTU.

He maintained that Pakistan has a combined power generation capacity of 24000 MW which it was unable to meet due to scarcity of natural gas supply to its power generation units. As of now, Pakistan has failed to discover new gas reserves, hence it required to imports natural gas to meet its growing energy requirements. Moreover, natural gas as a resource is of the utmost importance for Pakistan as it makes up for almost 50% of the country’s energy mix.

Giving recommendations, he suggested that with around 105 TCF reserves of Shale Gas that can be effectively exploited to meet the country’s energy demands, Pakistan needs to follow the global shale gas initiative. He was of the view that by modernizing the existing thermo power plant the efficiency and production will increase considerably, in the result; Pakistan’s reliance on foreign resources will also decrease.

While chairing the session Engr. Shamsul Mulk, former Chairman WAPDA/Former Chief Minister KPK drew attention towards the consistent policy failures in the energy sector, which have led to the present high costs of electricity.

He also asserted that as the cost of electricity generation from oil or coal sources is much higher, natural gas is crucial for Pakistan’s energy sector. In this scenario, Pakistan needs to import gas but the importance of mutual benefits regarding the IP project cannot be ignored and Pakistan should not compromise on pricing issues. He stressed the need for building more dams and water reservoirs. Quoting the example, Shamsul Mulk said Egypt managed to survive 7 year long drought with the help of proper water storage system of storage over Aswan.

Earlier, in his welcome remarks, Dr. Abid Qayyum Suleri, Executive Director, SDPI highlighted that SDPI’s report on IP project presents an objective analysis of Pakistan’s energy scenario while taking into consideration the financial and economic ramifications of the project.

He also emphasized the significance of this report and the IP project in the context of US-Pakistan relation as it is believed that Pakistan’s Prime Minister will have discussion about the country’s energy crisis with his US counterpart in Washington. Dr. Suleri said that the report gains significance also from the fact that Pakistan will have to consider the international natural gas scenario and the position taken by United States given its diplomatic relations with Iran.

Former Ambassador Shafqat Kakakhel, Chairman Board of Governors SDPI said that the report has been launched with the aim to contribute to the ongoing national dialogue over energy security of Pakistan. There is a dire need of improving transmission and distribution system, developing clean sources of energy, controlling indiscriminate spread of gas connection and maintaining smart meters, he maintained.

He said Pakistan has already witnessed capital flight due to energy crisis Pakistan as a lot of textile units had already shifted to Bangladesh that has also caused massive un-employment in the country.

For more information, contact:
Faisal Nadeem Gorchani
Coordinator, Policy Advocacy and Outreach
Sustainable Development Policy Institute (SDPI)
38 Embassy Road, G-6/3 Islamabad, Pakistan
Postal Code: 44000
Tel: +92-51-2278134, (Ext: 113)
Fax: +92-51-2278135
Cell: 00-92-333-559 2210
Email: main@sdpi.org